COMMISSIONER OF INCOME TAX Vs. RADHEY SHYAM

JUDGEMENT

(1.) AT the instance of Revenue the Income -tax Appellate Tribunal, Delhi (for short the "Tribunal") has referred under S. 256(1) of the IT 1961 (for short the "Act"), the following question, arising out of ITA No. 504(Del) of 1976 -77, for our opinion :

(2.) THE facts lie in a very narrow compass. The reference relates to the asst. year 1968 -69. For the relevant assessment year the assessee, an individual, filed his return on 4th Sept., 1968, declaring total income of Rs. 14,917. An ex parte assessment was completed on 29th March, 1972 on a total income of Rs. 98,417. It appears that the assessment was reopened, whereafter the assessee filed a revised return sometime in January, 1974 declaring a total income of Rs. 24,080 and was accordingly assessed. In the said return a sum of Rs. 10,000 was included, which according to the assessee was on the basis of a voluntary disclosure petition filed before the ITO. However, according to the AO the settlement arrived at was not entirely on a voluntary basis but after certain enquiries had been conducted by the Intelligence Wing of the Directorate of Inspection. The amounts were spread over on the basis of certain directions given by the CIT and accordingly the assessee had included the above -noted sum of Rs. 10,000 in his total income. On completion of the assessment, penalty proceedings under S. 271(1)(c) of the Act, were initiated against the assessee. After granting an opportunity of being heard the ITO levied on the assessee a minimum penalty of Rs. 10,000 under S. 271(1)(c) of the Act for allegedly concealing the particulars of his income by furnishing inaccurate particulars.

(3.) BEING aggrieved of the second penalty order, the assessee took the matter in appeal to the Tribunal. The Tribunal after taking into consideration the order passed by the CIT, on the basis whereof the said penalty was levied, held that the order of the CIT could not be treated as a direction to the ITO or to the IAC to levy a penalty. According to the Tribunal the discretion for levy of penalty vests in these officers and they have to exercise their discretion in a judicial manner. Accordingly, the Tribunal came to the conclusion that the order levying penalty suffered from the vital defect of non -application of mind by the IAC and, therefore, the penalty could not be sustained. On Revenue's moving an application under S. 256(1) of the Act, the aforenoted question has been referred.